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Programme Overview

Productivity and innovation are at the centre of material wellbeing, but Europe in general and the UK in particular, have lower levels of measured productivity than the US, even after controlling for different inputs such as capital. And since the Great Recession of 2008, British GDP per hour (labour productivity) has actually fallen.

The programme addresses three major questions. First, what are the reasons for wide variations in productivity across firms and organisations even within narrowly defined industries? Second, looking particularly at the UK, why is the level of UK productivity (output per hour worked) still so far below its main comparator countries? Third, what is the reason for the UK 'productivity puzzle' - the slower growth of productivity in recent years?

We look at the performance of the UK over the last 30 years, especially under Labour and policies toward growth going forward in UK Economic Performance Since 1997: Growth, Productivity and Jobs.

This work was taken forward by the LSE Growth Commission which reported in early 2013 on how to formulate and implement a long-term growth strategy in the UK.

The Commission’s second Report was published in February 2017. The 2017 report addresses new questions facing the UK following the result of the June 2016 Referendum.

LSE Growth Commission Report 2017:

UK Growth - a new chapter

LSE Growth Commission's 2017 report sets out a new blueprint for inclusive and sustainable growth in the UK that deals with the challenges facing the UK, old and new. Drawing on the latest research, analysis and evidence from leading practitioners and scholars, the Commission outlines the top priorities in four key areas:
Jobs and skills
In a world of rapidly changing technologies and labour markets, it is essential to develop systems of lifelong learning to promote greater security and adaptability for workers.

Industrial strategy
The UK needs an industrial strategy – the government is right to focus here - but there are gaps between this vital area and monetary, fiscal and competition policy.

Openness
Britain's strength is in services, and two-thirds of the country's trade is with the US and EU. Negotiations must focus here: a trade deal with the US is needed, as is a new EU trade agreement with a "services passport" at its core.

Finance and growth
The UK is a world-leading financial centre – yet despite its strength there is a shortage of competition.

For further information see the LSE Growth Commission website.

The Commission drew on evidence given in the five open sessions held during November and December 2016. These public sessions were filmed and are available on the LSE Growth Commission website and the CEP YouTube channel

Investing for Prosperity: A manifesto for growth

Investing for Prosperity Book Cover The LSE Growth Commission's 2013 book, edited by Tim Besley and John Van Reenen.

This book (available to buy online), based on the work of the LSE Growth Commission and greatly expanding upon its first published report, argues that the UK should build on these strengths and proposes how we can address the inadequate institutional structures that have deterred long-term investment to support our future prosperity.

Watch Professor John Van Reenen present a 'manifesto for growth' for the UK economy over the next 50 years:

Our most recent work on the UK productivity puzzle, emphasising the role of wage flexibility is The UK Productivity and Jobs Puzzle: Does the Answer Lie in Wage Flexibility? - published in the Economic Journal, 124, 433-452.

The programme examines the role of new technologies, management practices, investment, R&D, skills, competition and regulation of labour and product markets in shaping innovation and productivity. There is a strong focus on linking empirical findings to practical policy and economic theory.

The challenge of restoring productivity growth must also address the problem that faces all countries of managing climate change. An industrial revolution driven by the search for low-carbon technologies is likely to emerge as one of the most important areas for innovation in the coming years. Therefore, we also conduct research on 'Green Growth', studying mainly at the firm level, the determinants of emissions, evaluations of policy aimed at reducing emissions, effects of climate change on productivity, and drivers of clean innovation.

Our research can be broadly grouped into the following themes:

- Management Practices and Organisational Structures

- Drivers of Innovation

- New Technologies and Productivity

- Capital Investment

- Public Sector Productivity

- Green Growth

- UK Productivity Performance and Policy